Do financial statements help in Financial decisions and corporate valuation

However, the richer the person is or the bigger the company is, the more sophisticated is the financial statement. Below is an example of a simple personal financial statement.

“CASHFLOW 101” (Kiyosaki and Lechter, 2002)

Profession __________

Goal: To get out of the rat race and onto the fast tract of building up passive income to be greater than total expenses

Income Statement

Income
Description	Cash Flow
Salary:
Interest:
Dividends:
Real Estate:
Businesses:
Expenses
Taxes:
Home Mortgage:
School Loan Payment:
Car Payment:
Credit Card Payment
Retail Payment
Other Expenses:
Child Expenses:

Source: CASHFLOW ((Kiyosaki and Lechter, 2002)

Auditor _________________

Passive Income = _________

(Cash flows from interest + Dividends + Real Estate + Businesses)

Total

Income: ________

Total

Expenses: _______

______________________

Monthly

Cash Flow: ____________

(Pay Check)

Usually, in an income statement as exemplified by the table of two columns above, the record begins with description or the source of the income and the cash flow or the amount earned from the source.

Balance Sheet

Assets	No. of Shares	Cost/Share	Liabilities
Stocks/Mutual’s CDs			Home Mortgage:
			School Loans:
			Car Loans:
Real Estate	Down Pay	Cost:	Credit Cards:
			Retail Debt:
			RE Mortgage:
Businesses	Down Pay	Cost
			Liability: (Business)
			Bank Loan:

Source: CASHFLOW (Kiyosaki and Lechter, 2002)

As illustrated on the sample table above, before a managerial decision can be made, there is a clear-cut need to know the difference between the company asset and the company liability. Therefore, the managerial accountability which obviously means understanding company bookkeeping gives the manager an accurate control over company finances as well as subsequent company future (Pratt, 2003; Kiyosaki and Lechter, 2002).